Breakingviews: Giving GE credit

Antony Currie and Reynolds Holding explain why the $2.9 billion IPO of the conglomerate's credit card unit, Synchrony Financial, may be a riskier investment than many are expecting.

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What's in -- a -- well if -- General Electric it's the proceeds from the initial public offering of the conglomerates. Credit card and and it's equity financial. Biggest US IPO so far this year two point nine billion dollars but Anthony. There are some special risks -- this tells -- yes absolutely -- -- that's -- the deal is priced at the low end of its range this morning. Right and I just took a quick look at web two other consumer financial firms a stunning that should have been public -- and consume which is sort of lines. Ally able civil servants and corroding and they are both down. I think allies how sound full percent. -- tendency to them about 20% so it's not great times in general. Fetus if us. Well I think it's just an degrees and who also is as a degree of concern that may be just may -- we're getting social Pete also was on his -- -- we're not up. But above much of it the best -- to an adult cells. 89 years now. Of course credit 'cause a bit different here because get this spending nine on that. I think Kim revenue was a pretty pretty well last year accessing -- it all forming democratic outcome -- We'll sexing could be financial focuses not so much of what you and I might think it was regular credit -- that we -- up fees aren't successful of -- thanks. These guys -- brand accounts stools Amazon told Almonte right that's what across a customer customer gets when his car especially for exactly -- -- -- -- And in the costs here he was saying a case for and it still costs a bit more risky in people gonna get them are gonna be sub prime credit really okay. That's but there's a degree of Trace of that about just under us said that that's a sinker and is lines. So called sub prime -- was discovered which is just -- More regular credit card company which he -- just coming cabbie wanted no association first. That has about 18% just of -- -- credit companies lowered its business gonna cost. So it. If you think about what that means that this is the kind of unit to get hit more more quickly and harder in any kind of doubt it which. That they think olympians and money that can't pay their bills exactly. Lots of people say he got back to the worst financial crisis we've had a game many decades between just district. The net charge offs acts Cink Kenny were about eight point 1% NT and 2000. That's if for those guys that have not been paid for thirty visible there. Now discovers much less. But right now you know. -- increase it around full percent so I said nice and -- -- that this kind of complicated than that -- station court against a sixth sense and he just factory in a can what does this mean for this company waited for an -- exactly when and if necessary. If you fracture in his next two percentage point increase right. That is actually -- -- third of their earnings last year it. And I know is this even happen anytime saint it will mean credit cycle to go in seven years for the senate is survived downturns and it's -- -- and an eighty year old company has yet but six of the services if not it's it's clear is that what I'm saying is gonna die I mean unless he's an absolutely terrible and on an astounding -- and we -- lower -- about the way we meant. That baton and examines what it does mean if you invest -- is a kick it isn't the only spending can be I want to access. Returns on assets and credit card companies often time does a lot for youthful senator and play -- and west. Banks need to makes a 1127. Times these guys are making three times. They'll be at a survive accountant Christian progresses this is -- almost went discovers she's a much this was company it. Now giving you the basic can be fine but and in that is exciting stuff we're gonna leave it there. In the meantime stay tuned for more breaking views from all.

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